The Watch Tower was changed because of how insanely good it was compared to most farming locations. It benefited from having an abnormally high Elite density, resplendent chest spawn, and was located conveniently close to a waypoint (a combination which made it an outlier in terms of efficiency as well as a go-to spot for a large number of players). While there's nothing wrong with a particular farming location being good or even better than other areas, it becomes an issue when one spot starts to eclipse everything else. We wanted to make sure players didn't feel like they had to farm that spot or else they'd be missing out, so in patch 1.0.5 we moved it from Northern Highlands to Southern Highlands with the idea that it would require spending some extra time to find it, since that was one of major reasons why the area was so OP. Initially we didn’t want to nerf the dungeon, but eventually the Elite density was toned down anyway, and the tower remains in Southern Highlands.

To answer your question, though, parts of the Watch Tower were nerfed, but the chances for it (and the merchant) to spawn have not changed. I wish you good luck in your search for the merchant, but it’ll probably take a few attempts!

"There is an effective area for finding loot in a loot finding game?!'"We will change that...."
I think this is a pretty simplistic way to view the situation, but I agree that having a favorite farming spot nerfed doesn't feel great. We get that. The alternative, though, (at least in situations like this, where that spot is way beyond the norm) is that people feel forced into playing one tiny section of the game, and that's arguably worse for the health of the game overall.

Weeping Hollow Density Restored
It appears Blizzard just wanted a reaction out of the players on the PTR with adjusting the density in the Weeping Hollow. It was mostly negative, so the change is reverted!

The changes we made to The Weeping Hollow in the most recent PTR patch were really just an experiment. Based on feedback we'd seen regarding density (in terms of monster spawn pacing), it wasn't totally clear what players preferred; some wanted more clumps, some wanted less, and some liked things just the way they were. There wasn't a clear-cut answer, so our designers made a change to see what would happen. Rapid iteration like that is one of the cool things we can do with the PTR.

Given the response from players since the change went live (thanks for all your posts, btw), we're going to be restoring monster density and spawn pacing in The Weeping Hollow to its earlier PTR levels, and that will most likely be what we stick with for 1.0.8.

The Process of Adding Changes to the Game
Grimiku has shed some light of Blizzard's process of adding new content or changes to the game. It is not an easy one.

I know there is a lot of criticism about sentences like "something we talk about in the office" or "it's something were working on", and the solution everyone wants are faster updates. I think we'd all love for the patching process to be quicker (that’s kind of like saying “who doesn’t want free stuff?”), but the fact is: patches aren’t created in a vacuum, and it’s really not as simple as you might think.

Seemingly simple changes usually have a lot of work associated with them, and it’s easy to underestimate the complicated nature of the work involved. New content has to be coded, implemented, assigned art assets (sometimes), have a test environment built for it, tested until its right, and then we rinse and repeat that process each time we iterate. After that, we need to coordinate a release on a global level, make sure everything is localized, and then deploy to the live game (which is not just a flick of a switch). That isn’t to say we can’t do better, and we’re always working on ways to improve, but my point is this shouldn’t be trivialized. It’s a disservice to your feedback and this discussion to do that.

We also tend to use flexible language when talking about changes that aren’t ironed out yet or have a timeline for when they’ll be implemented. That way, we can talk about what we’re working on and acknowledge ideas/issues even if we don’t have a lot of details to discuss (i.e. we may not always know when a particular change is going to make it into the game or how it will manifest, but that doesn’t mean we can’t talk about it). While that may not be your ideal scenario, we prefer it over staying quiet since it keeps the community more involved. Just some food for thought.

Game Devs Don't Work on the Website
Some players have speculated that developers are wasting their time by adding things to the Battle.net site. That is not the case however, as that's the Web Designers' job.

Web updates (like the new icons) are handled by our web team, not the game development team.

Similarly, polls that we post are handled by the community team, not the game development team.

These are small things we can do to improve the site and how different players use it; they do not impact game development.

So, my loquacious button enthusiastic...as much I enjoy great satire, I'm going to ask you to please stop trolling.

Console and PC Teams are Different
On the same note as the previous article forum members fear that the development of the console version of Diablo 3 might be slowing down the PC version. Again, those are different teams.

We know there is a concern among some players that working on the console version of Diablo III takes away from PC development, but thankfully that's not the case. They are entirely separate teams with individual content cycles. Lylirra made some comments about this issue in this thread, and this one. I'll quote a few of her comments below.

Our plan is to continue using staggered development, which means the PC version and the console version will have their own separate development teams and cycles.

Beyond that, we actually have an independent team of designers, engineers, artists, and producers that are dedicated to adapting Diablo III to the PlayStation and creating an epic console experience. It's their job to take the PC game and translate it to the PS3, and in a way deal with all the considerations you're talking about. While our console team and PC team do collaborate (and have collaborated in the past), it's always to ensure that we’re staying true to D3 on the PlayStation platform.

Ridiculous. The dude "just" wants to be able to WW from one end of the zone to the other, and is upset that now he can't. And the crazy thing is that Blizzard is taking its feedback from people that get outraged that "sometimes there is an empty screen between mob clumps". OH NOES!!!

It takes a special kind of retard to think that Game Devs are the same people working on Website-related things, in a major company such as Blizzard. I mean, what the hell are people thinking? Please - people... remove head from arse for once... These news are getting more ridiculous as time progresses, and the amount of "stupid" in some people in the D3-community is really beginning to show.

God those devs are useless. They just don't get it.
Instead of nerfing the Watch Tower, HOW ABOUT BRINGING EVERY SINGLE OTHER ZONE IN THE GAME UP TO THE SAME STANDARD?
No wait. That would be "fun". Can't have any of that going around in a game.
And it would also take some actual thinking and hard work, both of which they appear allergic to.

God those devs are useless. They just don't get it.
Instead of nerfing the Watch Tower, HOW ABOUT BRINGING EVERY SINGLE OTHER ZONE IN THE GAME UP TO THE SAME STANDARD?
No wait. That would be "fun". Can't have any of that going around in a game.
And it would also take some actual thinking and hard work, both of which they appear allergic to.

To this statement a blizzard developer would reply in this fashion:-

"You think that's fun???No that's not fun!!!This is fun!!!!Buffing all areas so that everyone can get good loot without using AH is not good for the long term of the game.While nerfing any good farming spot that comes up is super fun.Be grateful."

And don't bother flaming me people i won't even bother to reply.

Private Mod Note
():

Rollback Post to RevisionRollBack

Grinding Gear Games (Company that produced POE): "These are great Ideas, we will use them for sure as they are clearly what the player base is looking for."

Blizzard: "While we agree that this game needs re-working and that these ideas could help the future of this game, we have no plans to listen to our fan-base at this time."

Ridiculous. The dude "just" wants to be able to WW from one end of the zone to the other, and is upset that now he can't. And the crazy thing is that Blizzard is taking its feedback from people that get outraged that "sometimes there is an empty screen between mob clumps". OH NOES!!!

Yeah that's basically the exact same thought I had. Sadly this thread exhibits the same issue with two people whining about a nerf to Watch Tower as if Blizzard didn't just spend months buffing 90% of the game.

Evil Blizzard. Shame on them for putting in some very minor nerfs with the massive amounts of buffs that this patch has. They're obviously trying to ruin our fun with 1.0.8. I swear some people in this community would probably leave their hands and feet in the bed when they woke up if they didn't have wrists and ankles. The stupidity is sometimes overwhelming.

It's pretty sad that Blizzard has to continue to waste time by repeating that the web team isn't the team that develops the game and that the console team is different and this and that. It's boring, it's old, it's something that anyone with a brain knows. Yet, instead of meaningful dialogue they have to waste their time addressing the total morons out there.

God those devs are useless. They just don't get it.
Instead of nerfing the Watch Tower, HOW ABOUT BRINGING EVERY SINGLE OTHER ZONE IN THE GAME UP TO THE SAME STANDARD?
No wait. That would be "fun". Can't have any of that going around in a game.
And it would also take some actual thinking and hard work, both of which they appear allergic to.

To this statement a blizzard developer would reply in this fashion:-

"You think that's fun???No that's not fun!!!This is fun!!!!Buffing all areas so that everyone can get good loot without using AH is not good for the long term of the game.While nerfing any good farming spot that comes up is super fun.Be grateful."

And don't bother flaming me people i won't even bother to reply.

These posts are silly. Actually a game designer would reply to that with:

The reason you find the Watch Tower fun could be partly because it is better than the rest of the areas. There is a contrast. It is the same with someone has fun playing a severely overpowered class against other players and "pwning noobs". That doesn't mean that is the right choice for the rest of the game or the players.

Even if we put all of that aside, when one area deviates from every other in the game, 99% of the time the problem lies with said area. Plus it's way easier and efficient to just tone the area down than buff everything else.
Same applies to every other change that can be made.

Sure a player has more fun with more loots because that's the carrot-stick in this game, but if you make loot acquisition effortless in every area -and I know I'll go a bit on the extreme side here- then why not go ahead and add yellow loots+ on each kill? Where does it stop? Not to mention that you'll get bored faster and easier since the element of wonder/surprise will be gone due to the commodity of drops.

In a way it's a bit like spoiled kids who want more candy all the time, without realising that if they did get it all the time they would eventually get sick of it.